Solutions 6.pdf - Department of Finance FNCE 30003...

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Department of Finance FNCE 30003: International Finance Semester 2 2016 SOLUTIONS 6 PROBLEMS 1: INTERNATIONAL PORTFOLIO INVESTMENT (CONCEPTUAL) (Eun and Resnick: 7 th Edition, Chapter 15 Question 1) 1a. What factors are responsible for the recent surge in international portfolio investment (IPI)? 1b. Security returns are found to be less correlated across countries than within a country. Why can this be?
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1c. Explain the concept of the world beta of a security. 1d. Explain how exchange rate fluctuations affect the return from a foreign market measured in dollar terms. Discuss the empirical evidence on the effect of exchange rate uncertainty on the risk of foreign investment.
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  • Spring '14
  • AdrianaCrespoTenorio

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